How do you view FDX earnings, it is down today over 10%....
Would you consider this drop an opportunity for 1-2 year horizon and why?
Not sure about this but Would CJT be considered a proxy, its down today also.. what is your opinion on this one...opportunity or no.
Thx
FedEx reported another mixed bag in fiscal 2Q. Freight share gains from Yellow's July bankruptcy and volume diverted from UPS appear to have been mostly sticky. Less-than-truckload shipments per day fell 5.1%, about 110 basis points better than expectations. The consolidation that occurred after Yellow's failure has been a net positive for rates, which were up 7% from last year. LTL pricing should rise by mid-single digits over the next 12 months ex-fuel surcharges. Express came in well below consensus as volume was weaker than management's initial outlook, which carried a heavier cost base. FedEx also announced a new restructuring of its air network, hoping it will lead to improved utilization and margins as part of its DRIVE initiative. EPS missed estimates by 4% and sales missed by 1%. Analysts are worried about weaker profitability in its air division, which is far more costly to operate. The stock is still up 44% even with today's decline. It is cheap at 14X earnings. It is still expected to show good growth over the next two years. Overall, we would call it a disappointment and not a disaster. We think it is buyable on valuation and growth, but are big believers in momentum, and would wait for this to settle in for a few weeks before stepping up. CJT is an approximate proxy and has already reported earnings (comments in the Q&A). It is riskier and also far more expensive than FDX, and FDX looks better to us right now.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in FDX.